A just-released report from Quicken Loans found that home appraisals nationwide in August were an average of 1.56 percent lower than the values expected by homeowners seeking to refinance a mortgage. In several cities — Philadelphia, Detroit, and Baltimore — appraisals were more than 3 percent below homeowner estimates.
Here in the Bay Area, however, the reverse is true. In the midst of rapid price appreciation, the average homeowner in San Francisco and San Jose tends to underestimate the value of his or her home compared with a professional appraisal — 2.48 percent and 2.33 percent, respectively, in August.
If you’re looking to sell your home, the danger of underestimating its value is obvious: You risk losing money on the sale. But pricing your home too high can bring problems, too: It may sit on the market for several months — possibly delaying you from moving into your next home — and repeatedly lowering the price may turn off potential buyers.
The surest way to get an accurate estimate of your home’s value is to hire a professional property appraiser, but there are other options, too. A trusted real estate professional who knows your neighborhood and its recent sales history is a valuable asset on your side. He or she has access to private real estate databases with reams of useful and up-to-date information.
Real estate professionals can also prepare comparable-sales reports to help you determine an appropriate listing price. Comps includes data on homes in your community that are nearly identical to yours, with similar floor plans, square footage, and amenities that sold recently. These can be used to give you an accurate estimate of what you can expect to receive for your home.
There are a number of online tools that are meant to help you determine your home’s worth, using publicly available databases and proprietary algorithms, but a recent study by U.S. News & World Report found wide variations in their valuations. The magazine tested homes in several cities to see what values they would be assigned from seven online estimators. A two-bedroom, one-bath home in a “trendy neighborhood of 1930s bungalows” in Los Angeles produced values ranging from $665,500 to $1,020,700.
The bottom line: Do your homework. Free online tools can be helpful, but an estimate from a real estate professional or appraiser can focus more directly on your home, helping you to set a price that will satisfy both you and your buyer.
(Photo: Flickr/Ervins Strauhmanis)